06/18/2006
VOLUME 243
Companies featured in the current edition of the newsletter: ADSX, ARSC, ATWO, BGES, CLRI, CYTR, EMIS, FMTI, FSN, GEPT, GNBT, HOM, HYTM, IMMGE, ISON, ITRO, ITUI, IVOI, LNXGF, PEFF, PTCH, QTXB, RTK, SCLL, STIY, SWTS, USAT
Volatility, marked by wild intra-day swings in price characterized last week’s trading, but when all was completed, there was little movement in the broader averages. The Dow rose 122 points last week raising its annual gain to 2.8%. The Nasdaq declined 5 points for the week increasing its year-to-date loss to 3.4%. The S&P fell less than 1 point maintaining its gain for the year at 0.3%. The Russell 2000 shed 8 points reducing its annual gain to 2.9%.
Investors continue to focus on commentary from Fed officials, trying to determine when they will stop raising rates. Last week’s key metric, the CPI, increased by 0.3% (bringing the year-over-year increase of the core rate to 2.4%), which caused concern among a number of Fed officials who aired their thoughts publicly. Other economic news included the core PPI rising 0.3% and a disappointing increase in May retail sales of 0.1% being offset by the unexpected rise in the measure of consumer sentiment to a preliminary 82.4 in June from 79.1 in May. Even with oil falling below $70 a barrel, ten-year yields have been lower than two-year yields over the past few days, which could increase concerns that an inverted yield curve could be signaling a recession.
What should investors look for this week? Consumer electronics company Circuit City (NYSE:CC) will report quarterly results on Monday before the bell. At noon that day, biotech giant Amgen (NASDAQ: AMGN) will host a conference call. Tuesday morning, food retailer Kroger (NYSE: KR) will issue earnings. Wednesday morning, Morgan Stanley (NYSE: MS) and FedEx (NYSE: FDX) will report results. After the close, retailer Bed, Bath & Beyond (NASDAQ: BBBY) and electronic manufacturer Jabil Circuit (NYSE: JBL) announce quarterly results. Thursday after the close, tech giants Oracle (NASDAQ: ORCL) and Micron (NYSE: MU) are scheduled to report their results. Alcatel (NYSE: ALA) will host an Analyst Meeting on Thursday as well.
The conference calendar is light with the week starting off with Rodman & Renshaw sponsoring its 3rd Annual Security, Biodefense & Connectivity Investor Conference in New York starting Monday where Global ePoint (NASDAQ: GEPT) will present at 8:50 a.m. and Isonics Corporation (NASDAQ: ISON) will present at 2:50 pm. On Tuesday, JP Morgan will host its Energy Day Conference in New York. Additionally, Piper Jaffray is hosting the one-day Retail and Financial Services Symposium on Tuesday in Boston.
Shares of small-cap companies could see volatility early in the week as Russell announced the additions and deletions to its indexes, including the widely-followed Russell 2000, late Friday well after trading ended. As we predicted several weeks ago, Special Situation stocks Emisphere Technologies (NASDAQ: EMIS), Hythiam (NASDAQ: HYTM), Home Solutions of America (AMEX: HOM) and Rentech (AMEX: RTK) were added to the Russell 2000, the leading benchmark for small-cap stocks. Companies that were added to the index could see incremental buying over the next two weeks from fund managers looking to mirror the performance of the index, prior to June 30th when the indexes are formally rebalanced. Cytrx Corporation (NASDAQ: CYTR) and Generex Biotechnology (NASDAQ: GNBT) were added to the Russell Microcap Index, in its second year of existence.
There are few major economic reports this week. On Tuesday, May Housing Starts and Permits will be announced. Wednesday, the widely followed weekly Energy Inventory report will be issued. Thursday, the weekly Employment report and May Leading Indicators will be reported. Finally, May Durable Goods Orders will be posted on Friday. Additionally, Atlanta Fed President Guynn will speak about economic outlook on Monday while Cleveland Fed President Pianalto will provide opening remarks at a banking conference on Thursday. As remarks from previous Fed officials stirred the marketplace over the past few weeks, investors may be more focused towards any inflationary comments from such speakers.
Healthcare services company Hythiam, Inc. (NASDAQ: HYTM) held its Annual Shareholders Meeting on Friday, where the CEO said that this week could be the most significant in the company’s history. First, Dr. Harold Urschel is scheduled to present some of the underlying details of his recent pilot study of the PROMETA(TM) protocol at the CPDD conference next week on June 21. Given Urschel’s favorable comments in mid-May, it is likely that the data will serve to further confirm the efficacy of this novel treatment to drug and alcohol addiction. Second, the drug court of Gary, Indiana will be disclosing the details of its pilot study of PROMETA at the NADCP industry event on June 22. The data that was previously reported from this pilot was extremely favorable. According to a note published last week from the UBS analyst who covers the stock, “We expect these conferences will lead to a wave of new business for Hythiam and perhaps provide a basis for discussions with third-party payers. Of note, PROMETA is currently being piloted for possible reimbursement by three state health agencies as well as a private health plan.” The stock ended the week at $6.97, down 63 cents.
Home Solutions of America, Inc. (AMEX: HOM), a provider of recovery, restoration and rebuilding/remodeling services, held its Annual Meeting on Friday. There were two significant statements company executives made at the event. These were the likelihood that the company would make a significant accretive acquisition in the coming months and that it would meet or exceed its 2006 fiscal year guidance. The Senate on Thursday overwhelmingly passed a bill which includes $19.8 million in hurricane relief that could be signed by President Bush this week. The bill includes $4.2 billion expected to go to meet Louisiana’s housing recovery needs $3.7 billion for federal flood control projects in the New Orleans area and $6 billion for the Federal Emergency Management Agency’s disaster fund, which includes $400 million for temporary housing sturdier than FEMA trailers. HOM should directly benefit from this additional spending. The company also said that its common stock will begin trading on the NASDAQ National Market on Tuesday June 27th under the new ticker symbol HSOA. Note that the company is now on the Reg SHO list, suggesting that there is a high level of short interest in the stock, which confirms what we have been hearing from brokerage firms that the stock is difficult to borrow. Note that short interest for June will be announced on Wednesday. Shares fell 2 cents for the week to close at $7.53.
Fusion Telecommunications International, Inc. (AMEX: FSN), a provider of advanced VoIP services, completed the first version of its proprietary softphone that transforms a personal computer into a VoIP telephone. At no cost, customers will be able to download a beta version of the feature-rich softphone to their personal computers by going to www.efonica.com. Fusion’s softphone differentiates itself from competitive products by allowing either broadband or dial-up connected users to make calls over its high-quality VoIP network. Such products provide a much-needed solution to many customers in the developing countries that Fusion targets, who in the past, have been unable to access VoIP services due to the lack of a broadband connection. The new softphone is an integral part of a new free service offering that the company is introducing before the end of June that should create a lot of excitement for Fusion. The formal launch of the service prior to the end of the month and the advertising associated with it should raise the company’s profile, and potentially its share price. Shares declined by 4 cents to close the week at $2.10.
Rentech Inc. (AMEX: RTK), a developer of alternative energy sources, reported that its wholly owned subsidiary, Rentech Energy Midwest Corporation (REMC) signed an agreement with Kiewit Energy Company for the engineering and design phase of its first commercial coal-to-liquids plant. This agreement is a significant milestone for the company enabling it to move aggressively towards commercially deploying its Rentech CTL process and manufacturing ultra-clean transportation fuels. The stock fell 18 cents for the week to close at $4.48.
Applied Digital (NASDAQ: ADSX), a leading provider of identification and security technology, should substantially benefit from the Canadian government’s attempt to revitalize the country’s struggling beef industry. With the recent decision by the government to extend a national program through December 2007 for the funding of livestock RFID readers and scanning, Applied Digital’s subsidiary Digital Angel Corporation is well-positioned to increase sales of its Radio Frequency Identification tags and scanning systems since it is one of the few companies with electronic RFID ear tags approved for the program after testing by the Canadian Cattle Identification Agency (CCIA). The government-backed program is part of Food Safety and Quality within Agri-Food Canada to reimburse eligible participants by defraying a part of the cost of RFID equipment used to scan electronically identified animals as they move from farm to market. Digital Angel was able to experience very strong sales in Canada due in large part to this government program where more than 265,000 of its e.Tags were delivered to its Canadian distributors in November and December 2005. The government’s decision to extend this funding initiative should continue to help the company increase its top-line as the market opportunity is very large where it is estimated that there are 14.7 million head of cattle in Canada. Despite the news the stock fell 27 cents to close the week at $1.83.
Life sciences company Forbes-Medi-Tech Inc. (NASDAQ: FMTI), completed enrollment for its Phase II trials of its cholesterol-lowering compound FM-VP4. The trial’s primary efficacy objective is to determine the effect of two doses of FM-VP4, 450mg and 900mg, given for 12 weeks, compared to placebo, on low density lipoprotein-cholesterol (LDL-C). The anticipated goal of this trial is for FM-VP4 to be able to demonstrate a minimum of 15% reduction from baseline in LDL-C at Week 12. Topline results are anticipated to be released by year-end. To date, there have not been any significant safety issues or concerns raised during the trial’s progress. As the company continues to successfully implement its business plan investors have a lot to look forward to as its targeted market represents a significant opportunity as industry-wide sales of cardiovascular pharmaceuticals are estimated to grow to over US$40 billion by 2011. The company also announced that the Netherlands’s largest retailer, Albert Heijn, launched a range of cholesterol-lowering dairy products incorporating Forbes Medi-Tech’s cholesterol-lowering ingredient, Reducol(TM). The product range, marketed under the Albert Heijn private label brand, will include: a margarine spread, a spoonable yogurt, and ‘original’ and ‘strawberry flavor’ yogurt drinks. This launch is significant for Forbes Medi-Tech as sales should benefit for its heart-healthy products through this very large distribution network. The stock fell 3 cents to close at $2.13 for the week.
Generex Biotechnology Corporation (NASDAQ: GNBT), a leader in the area of buccal drug delivery, announced that two internationally renowned diabetes investigators from University Campus Bio-Medico in Rome, made a podium presentation of the results of a research project sponsored by GNBT at the 66th Annual Meeting & Scientific Sessions of the American Diabetes Association held early last week in Washington, D.C. The investigators described the potential of the GNBT’s technologies to more sensitively and accurately diagnose patients with Type 1 diabetes which could lead to the identification of subjects at high risk for the disease. The technology also offers hope for earlier intervention in the management of diabetics to help prevent some of the long-term debilitating effects of the disease. Separately, GNBT also reported financial results for its third fiscal quarter ended April 30th with operating losses slightly widening to $3.9 million from $3.3 million, mainly due to growing spending on R&D. However, the company is on a solid financial footing as it had approximately $42 million of cash as of the end of April and has since raised $13.5 million more. Meanwhile, the company is in the process of finalizing work for a New Drug Submission (NDS) for regulatory approval of bucal insulin product, Generex Oral-lyn™, in Canada. This NDS should act as a blueprint for similar applications to the FDA in the U.S. and the European Agency in EU. Generex was also added late Friday to the Russell Microcap Index, which includes the 1,000 companies in the bottom of the Russell 2000 and the next 1,000 companies based upon market capitalization. Shares declined 29 cents to close at $1.47 for the week.
Isonics Corporation (NASDAQ: ISON), a developer of innovative solutions for the homeland security and semiconductor markets, reported that its Homeland Security and Defense Corporation subsidiary entered into a definitive agreement with privately-held ISCON Video Imaging, Inc. giving ISON the right to acquire up to 51% equity ownership in the company based on the successful completion of certain milestones. ISCON is developing patent-pending infrared imaging-based technologies for the non-invasive detection of objects hidden under clothing as well as technology for determining the chemical composition of such objects. Such a partnership is beneficial to both entities as Isonics can take advantage of its extensive industry contacts to help introduce demonstrations of ISCON’s beta prototypes in airports, public buildings or correctional facilities. Alternatively, the fully developed version of the ISCON technology holds great promise to be a stand-off detector for suicide bombers and complements Isonics’ area of focus in its homeland security division. Shares declined 12 cents to end at $0.68 for the week.
Homeland security company Global ePoint, Inc. (NASDAQ: GEPT), reported that its aviation division, Global AirWorks, completed the first installation for Supplemental Type Certification of its InFlight Entertainment Retrofit Solution for Boeing 757 and 767’s used by Avianca Airlines. Global AirWorks expects to complete a total of six Boeing 757’s and six Boeing 767’s for the airline. This retrofit solution is a new proprietary 17-inch wide screen LCD replacement for the older Cathode Ray Tubes mounted in the aisles of the aircraft. In addition to superior viewing quality of the latest LCD technology, this product generates fuel savings for customers since over 400 pounds of weight with a differential weight of approximately 300 pounds provides an annual fuel savings of an estimated $394,000 per aircraft. The market opportunity is significant where it is estimated that an additional 3,000 aircraft use older technology that could be in need for upgrades. Shares fell 4 cents to close at $2.02 for the week.
USA Technologies (OTCBB: USAT) said in a regulatory filing that a global payments company, likely MasterCard International, which had entered into a pilot study last September to utilize its e-Port technology and related network in order to allow beverage vending machines to accept payment through the use of contactless credit cards, had entered into a new agreement for the commercial deployment of USAT’s G-6 e-Port in a major U.S. city. The new statement of work provides for the sale to MasterCard of 1,000 G-6 e-Ports. The e-Ports will be installed in beverage vending machines located in one large metropolitan city. The vending machines are owned by a leading soft drink bottler representing a major global brand, likely Coca-Cola or Pepsi. The global payment solutions company will provide point of sale advertising and local market programs to promote broad consumer use of cashless vending. USAT will receive $395,000 from the global payments solutions company, along with activation, network and processing fees from the soft drink bottler. Installation of the e-Ports is anticipated to begin in July 2006. USA Technologies also said it is in discussions with the global payments solutions company for similar deployments in other large metropolitan cities in a relationship that could represent significant revenue for the company. Shares ended the week at $7.85, down 15 cents.
Stem Cell Innovations (OTCBB: SCLL), announced that John Macomber joined its Board of Directors. Macomber founded Celgene Corporation and from 1989 to 1992 served as chairman and president of the United States Export-Import Bank. Macomber is the second significant executive to join the company’s Board within the last month. Recently, SCLL said that Lucio A. Noto, the former Chairman and CEO of energy giant Mobil Oil Corp. had joined its Board. Shares ended the week at $0.34, down 7 cents.
QuantRx Biomedical Corporation (OTCBB: QTXB), a medical technology company with leading edge products targeting worldwide health needs, announced that FluoroPharma, Inc., which is 43.4% owned by QuantRx®, filed its first Investigational New Drug application for CardioPET molecular imaging agent. CardioPET is a novel cardiac viability imaging agent in development that allows acute and chronic coronary artery disease to be assessed while patients are at rest. FluoroPharma plans to clinically demonstrate that CardioPET may be an accurate alternative to standard treadmill stress-testing since roughly 20% of patients with suspected coronary artery disease cannot undergo sufficient physical exertion on a treadmill, which is a standard test to assess the disease. Such a filing is filing further demonstrates the exceptional value of this investment for QuantRx shareholders where QuantRx® has the option to increase its ownership stake in FluoroPharma up to 100%. Despite the news shares fell 20 cents to end the week at $1.20.
Volume Alert:Clearant, Inc. (OTCBB: CLRI), the developer of the patent-protected CLEARANT PROCESS® for pathogen inactivation, traded approximately 8 times average volume after research coverage of Clearant by Torc Investments & Research was initiated last week with a buy rating and a 12-month price target of $2.00-$2.50. The report highlighted the company’s competitive advantage over its competitors since all CLEARANT PROCESS-treated tissue can come with a “100% Sterile” label.” Additionally, the company announced the publication of positive results from a study examining the safety and biomechanical integrity of tissue sterilized with the Clearant Process in the Journal of Orthopaedic Research (Volume 24, Issue 5). The study concluded that the Clearant Process using gamma irradiation of 50 kilograys per dose under controlled conditions and following a treatment with radio-protective solution, can virtually eliminate infections risks associated with soft tissue allografts while maintaining the integrity of the essential underlying protein in the tissue. No difference was generally detected in the preimplantation biomechanical properties of sterile tendons treated by the Clearant Process when compared to non-sterile, non-irradiated tendons. The study examined 28 semitendinosus tendons from donors, ages 15-55 years. Such results demonstrate the power of this process where the bacterial inactivation achieved with the Clearant Process clearly exceeds the FDA minimum requirement for sterility of medical devices. Shares rose 7 cents to close the week at $0.87.
Stinger Systems, Inc. (OTCBB: STIY), a leading provider of stun gun technologies, announced that it has sold 32 of its Stinger projectile stun guns, 10 prisoner control systems called Band-It, and 1 crowd control shield known as the Ice Shield to Pickens County Sheriff’s Office in Georgia. STIY management believes that the Pickens County Sheriff’s Office will serve as a role model for other law enforcement organizations throughout the country and will lead to accelerating sales in the future. Shares rose 10 cents to close at $1.40 for the week.
Sweet Success Enterprises, Inc. (OTCBB: SWTS), which has relaunched a product line made popular by Nestle’s to tap into the rapidly growing demand for convenient and nutritious beverages, reached a significant milestone of having its shares begin trading on the NASDAQ’s Over the Counter Bulletin Board. Such a move expands the universe of investors who can purchase the stock as the company continues to implement its business plan and grow sales and distribution of its all-natural nutritional beverages. The stock gained 9 cents for the week to close at $0.86.
i2Telecom International, Inc. (OTCBB: ITUI), a pioneer in globally ultra-portable high quality Voice-over Internet Protocol (VoIP) products and services, announced that its VoIP Service Web site www.voicestick.com, had a 250 percent increase in unique visitors last month and double the sign-ups for its VoiceStick. Such results are strategic in achieving margin enhancement as the company is gaining recognition without spending $200 to $2,000 per customer like other major VoIP players. The company’s VoiceStick.com brand offers features not found with any of the major players and has the exclusive ability to allow 3 separate modes (PC, cell phone and microgateway) for service. Additionally, i2Telecom recruited Bruce Nicklin to join its management team in as Vice President of Marketing. Shares remained unchanged for the week to close at $0.09.
Power Efficiency Corporation (OTCBB: PEFF), a developer and manufacturer of advanced energy savings technologies for electric motors, achieved an important milestone as it filed a provisional patent on its new digital technology for reducing energy consumption by electric motors operating at constant speed. This technology forms the foundation for future products to be sold under the Power Genius™ brand, which will cost less to manufacture and will incorporate additional features for future growth. Also, such technology will enable Power Efficiency to actively pursue licensing the technology to original equipment manufacturers where manufacturers of motor soft starts, appliances and shop tools, can incorporate this technology into their equipment resulting in improved efficiency of electric motors. The company also announced that it received an order for EcoStart® units by KONE Inc. for installation at the Port Columbus International Airport. The EcoStart® is based on Power Efficiency’s patented energy saving technology, and is manufactured by Power Efficiency exclusively for KONE. This order adds to the number of airports implementing the company’s energy saving technology where other airports using EcoStart® include Seattle-Tacoma International Airport and Toronto Pearson International Airport. The stock rose 2 cents to end the week at $0.27.
American Security Resources Corporation (OTCBB: ARSC), a holding company that acquires and develops technologies that will advance the development of alternative energies, entered into negotiations to acquire a photovoltaic company which owns significant intellectual property and produces photovoltaic products for the alternative energy industry. Such negotiations complement the company’s business plan as photovoltaic technology is considered one of the most environmentally-friendly power producing technologies available today since it does not require fuel and does not produce emissions. This potential acquisition will enhance American Security’s income statement since it is currently profitable with a strong customer base. The combination of the newly acquired technology with the company’s HydraStax™ hydrogen fuel cell offers a compelling alternative to traditional commercial power options which are heavily dependent by fossil fuels to customers. Shares fell by 1 cent to close at $0.12.
a21, Inc. (OTCBB: ATWO), a leading online digital content marketplace for creative professionals, further commented on the potential benefits of its recent acquisition of ArtSelect, Inc., a provider of online technology and fulfillment infrastructure for retailers in the custom framed Art and Wall Decor market. The transaction creates valuable cross-selling opportunities of a21’s images to ArtSelect’s core infrastructure strengths and client base. On a pro forma basis, in 2005 the two companies generated revenue of $21.3 million with ArtSelect’s gross revenue representing $12.1 million with EBITDA of $501,254. With the integration of ArtSelect into a21’s client offerings already happening, the company is very optimistic regarding future opportunities as a result of this powerful combination that helps a21 differentiate itself from competitors. Shares declined 9 cents for the week to close at $0.42.
Bio-Bridge Science, Inc. (OTCBB: BGES), a biotechnology firm focused on the development of vaccines with broad therapeutic and preventive applications, reported a major milestone pertaining to the development of its oral HIV vaccine. Final results reported from the completion of the Beijing Institute of Radiation Medicine’s pre-clinical safety and immunogenicity studies show no toxicity was observed in the animals orally administered with the HIV vaccine. Based on these favorable results, the company is expected to file application for clinical trials with the Chinese FDA in the near future. Shares were unchanged for the week to close at $2.15.
Itronics, Inc. (OTCBB: ITRO), a “Creative Environmental Technology” company and a world technology leader in photochemical recycling, has been named one of the world’s first International Green Heroes by The Green Organization, an independent international environmental group which is noted for recognizing, rewarding and promoting environmental achievements around the world. Itronics’ achievements in extracting the silver and other heavy metals and converting them into fertilizers marketed under the name GOLD’n GRO will be highlighted in The Green Book, the only global work of reference on environmental best practices. Shares were off by 1 cent to close the week at $0.03.
On the Wires: iVoice, Inc. (OTCBB: IVOI), a developer and licensor of proprietary technologies, reported that its subsidiary Thomas Pharmaceuticals Ltd. will be showcasing the launch of the New Black Cherry flavor of Acid + All(TM) product and will be unveiling two new product lines at the National Association of Chain Drug Stores’ (NACDS) Annual Marketplace Conference beginning this Friday in San Diego and running through June 27th. The company should receive great exposure from this event as the NACDS is the industry’s largest trade show attended by 200 retailers, representing 100,000 stores and $540 billion in buying power. Junior mining exploration company Linux Gold Corp. (OTCBB: LNXGF), acquired one million units in a private placement of Teryl Resources Corp., one of the main landowners in the Fairbanks Mining District in Alaska. Teryl has interests in four gold and silver properties in Alaska including a 50% interest in Linux’s Fish Creek Claims. Junior oil and gas producer, Patch International Inc. (OTCBB: PTCH) appointed Larry Blonde as Senior Land Consultant effective May 24, 2006. Blonde has been active in the oil and gas industry since 1964 with an extensive background in Alberta’s oil and gas businesses. Fusion Telecommunications International, Inc. (AMEX: FSN), a provider of advanced VoIP services, announced that Frederic V. Salerno joined its Advisory Board where he will assist in the creation of strategic relationships worldwide. Prior to joining Fusion’s Advisory Board, Mr. Salerno was Vice Chairman and Chief Financial Officer of Verizon Communications. a21, Inc. (OTCBB: ATWO), a leading online digital content marketplace for creative professionals, announced that Haim Ariav, a21’s Chief Creative Officer and the Chief Creative Officer and President of a21’s subsidiary SuperStock, no longer remains with the company and has resigned from the Board of Directors. Industry veteran Ellen Boughn has assumed Mr. Ariav’s duties. Cell biology company IMPART Media Group, Inc. (OTCBB: IMMGE), an innovator in the creation of out-of-home digital advertising content and information network management, will hold a conference call to bring investors and others up to speed on recent noteworthy events on Thursday, June 22nd at 4:30 PM EST.
